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Eskom must procure 50% of coal from black miners by 2018, says Gigaba

PUBLIC Enterprises Minister Malusi Gigaba is driving a process to establish a Mine Development Fund to finance the development of coal mines, mainly at the early exploration stage.

The minister said in his budget vote speech in an extended committee of the National Assembly on Tuesday that the government intended to ensure that by 2018, Eskom procured more than 50% of its coal from emerging black coal miners. This, he said, “would be a significant act of transformation”.

Over five years, Eskom is projected to spend more than R200bn for the supply of coal for its power stations.

“To date, significant work has been done to establish the fund, which will go into operation by the end of the 2013-14 financial year,” Mr Gigaba said.

The minister said he had an engagement with established miners, the Chamber of Mines, the South African Mining Development Association (Samda) and emerging miners in the coal and limestone value chain.

He had also launched the black emerging miners strategy to increase black participation and ownership in the coal-mining sector.

Mr Gigaba said the portfolio of state-owned companies had aggressively been accelerating investment to maintain aggregate demand to offset the global downturn and the reluctance of the private sector to invest. Three years ago, state-owned companies invested R53bn; in the next financial year this would amount to R113bn.

“Over the coming year, we will be mobilising our entire state-owned companies portfolio, along with their customers and suppliers, to give added momentum to a comprehensive industrialisation and transformation programme in our economy,” Mr Gigaba said.

“As part of this we will be exploring set-asides and other mechanisms radically to accelerate the promotion of black industrialists and the entrance of youth- and women-owned businesses into the mainstream economy.

“We will be reaching out to our large private-sector customers and suppliers in the resource extraction and processing sectors to partner with us in our developmental programmes; and will also be drawing on our influence over state-owned companies-related pension funds to provide additional leverage to this process.”

On the promotion of black business, Mr Gigaba noted that Eskom’s total procurement spending for the 2012-13 financial year was about R120bn while total spend on empowerment law-compliant companies was R103.4bn — 86.3% against the target of 70%.

As at February 2013, broad-based black economic empowerment spending at Transnet stood at R58bn, or 87% of total procurement spending.

In the year ahead, the minister said the department would explore ways to leverage the capabilities in Denel, Transnet Engineering and Rotek to support the localisation of strategic and complex industrial components.

He said Eskom had secured 82% of the funding required for its current build programme.

South African Airways (SAA) had started to implement its turnaround strategy and had achieved its cost compression target of R1.3bn for the year ending March 2013.

In the year ahead the focus would be on ensuring SAA’s cash position was stabilised, the cost compression programme was accelerated, the international network was reviewed and the long-term fleet plan finalised.

Mr Gigaba also announced that SA Express had cut R129m in costs in the last financial year.

He said Broadband Infraco had been stabilised over the last financial year, with all key management positions filled. The company invested R140m over the past year and had plans to spend more than R700m to upgrade technology, and improve network performance and reach this financial year.

Denel returned an unaudited profit of R60m in the 2012-13 financial year, breaking a long stretch of losses as a result of its strategy of global alliances. It signed R3.7bn in new, predominantly export orders.

Mr Gigaba said that in the coming year, Denel would continue with its three-year plan to consolidate its structure and cost base.

“We will focus on ensuring the success of the Hoefyster infantry combat vehicle production programme and further positioning the business for collaborative product development opportunities, with a focus on Latin America, Africa, Asia and the Middle East,” he said.